|
Investigation
2008
Pretexting and Investigations: Information Gathering Do's and
Don'ts
JANUARY 2008: Pretexting is defined
by the Federal Trade Commission as the practice of obtaining
personal information under false pretenses, and also is defined in
broader terms as using impersonation to trick someone into
revealing personal information. Pretexting has been a particularly
hot topic in some recent, high-profile corporate investigations and
indictments. In a Webcast presentation held November 28, 2006, Deloitte
Financial Advisory Services LLP and law firm Kramer, Levin,
Naftalis & Frankel LLP provided the experienced perspective of four
distinguished forensic and legal professionals regarding crucial
“do’s and don’ts” of pretexting and investigations. Attached is a
white paper developed from this Webcast. (Read
more...)
2007
Dos and don’ts
of internal investigations
DECEMBER 2007: When allegations arise,
particularly those that allege illegal acts, the allegations must be
promptly and thoroughly investigated. This article addresses some of the
do’s and don’ts in conducting these internal investigations. (Read
more...)
A Practising Manager’s Primer on Handling Fraud Investigations
Frauds are not normal business. They shock
you. They shock you because often they are perpetrated by someone you know.
Someone you even meet socially probably. Someone you thought shared the same
values. Somebody who was one of us.
However at times, the shock of fraud committed
by someone trusted paralyses many organisations to indecision. It is at
these times when an external consultant is most helpful in my view. If
organisations can take away the debate around whether to use external
resources or not by having a fraud response plan which mandates consulting
with an experienced fraud investigator, it helps immensely. (Read
more...)
A
Phased Engagement Approach to Forensic Accounting
JUNE 2007 -
There are several approaches to a forensic investigation. A phased
engagement approach manages the investigation efficiently because
it controls the engagement with decision points throughout the
process. A phased engagement is a step-by-step methodology that
manages time and fees, and yields conclusions based upon parameters
defined by the client (often an attorney) and the forensic
accountant. (Read
more...)
Highlighting
corporate fraud investigations
MAY
2007 - The unthinkable has happened. We have good employees. Our
people are honest. They don’t steal from us. They’re like family.
We trust them. So it goes when a company discovers a fraud from
within.
Then
what happens?
After the initial shock wears off, it’s time to start investigating
the situation. The company must know who did it, how the fraud was
committed, and what controls can be put in place to stop fraud from
happening again. This is all accomplished with an effective fraud
investigation. (Read
more...)
Strategies for Forming an Effective Forensic Accounting Team
APRIL 2007 -
Imagine this scenario: A CPA is leading a team of financial
statement auditors assigned to the routine audit of a software
manufacturer. As the team begins reviewing sales transactions, it
becomes apparent that hundreds of seemingly inconsequential
transactions present a noticeable pattern. Each small transaction
would fall below the scope of audit testing, and each of these
small transactions was at or near quarter- or year-end. The CPA
also determines that many of these transactions were directly
attributable to the activity of a certain salesperson. Further
analysis of the terms of the sales revealed that many of these
sales allowed for the immediate and unconditional return of the
goods following quarter- or year-end.
All of these
indicators are signs of a possible revenue-recognition scheme. CPAs
have neither the training nor the hands-on experience to tackle
such an assignment alone. The solution is to turn to a trained
forensic accountant to investigate more fully. Forensic accounting
assignments generally follow these steps: (Read
more...)
Cross-Border Investigations - Effectively meeting the challenge
2007: As trade barriers fall and
international commerce expands, and as the speed of conducting
business and remitting funds increases, companies that conduct
business across international boundaries are recognizing the
corresponding increase in the risk of fraud and misconduct.
However, it is clear from our research that some are more prepared
than others. Those organizations have bolstered their cross-border
investigations capabilities either through adding in-house
resources or by forming alliances with a third party, particularly
in the more specialized areas such as electronic data capture and
review and data analysis. (Read
more...)
International Investigations: Fighting Fraud Abroad
JANUARY 2007: The growing
globalization of business is exposing U.S. companies to a greater
risk of international fraud. According to authors Charles Kuyk and
Brenda Buetow, international fraud investigations pose special
challenges, which U.S. companies can mitigate with proper planning
and anticipation. (Read
more...)
2006
Complex Case Management
2006: My original title for this article was, "CaseMap, Nothing but the
Same Old Thing," but after some reflection, I thought my point
could be missed by those who might read nothing further as they are not
interested in, "the same old thing." That would be unfortunate
so, for the moment, let's just say that those of you "old school"
Investigators, with experience handling very complex cases involving
voluminous documents, and overwhelming information management issues,
will appreciate CaseMap as a way to do what you have always done, but
far more efficiently. (Read
more...)
Investigating
fraud needn’t be a game of chance
2006: When it
comes to fraud where do you turn? Fraud is potentially a
catastrophic risk for businesses and we need to change the way we
manage that risk and how we react to instance of fraud. The complex
and international nature of modern frauds requires a whole new
skill set from the investigator. (Read
more...)
Conducting Forensic
Investigations
December 2006: The American Conference Institute’s Conducting
Forensic Investigations program, sponsored by Deloitte Financial
Advisory Services LLP (Deloitte FAS), provided attendees with
guidance and strategies to help detect, respond to and prevent
financial fraud. David Bloch, Deloitte FAS principal, served as
co-chair, while Deloitte FAS Principals Brian Huchro and Anthony
Reid, Deloitte FAS Partner Howard Scheck, and Stephen Wagner, the
managing partner of Deloitte & Touche LLP’s U.S. Center for
Corporate Governance, all presented at sessions throughout the
conference. The two-day program featured a series of discussions
focused on the current enforcement climate and providing practical
advice on issues related to:
-
Planning
for and conducting a forensic investigation
-
Responding to government subpoenas
-
Preserving data and producing requested documentation
-
Sources of
information in fraud investigations
OCTOBER
2006: When you think of information in an internal fraud
investigation, you most likely think of things like a company’s
internal records. These include accounting documents, personnel
files, payroll records, accounting system information, and internal
memos. While these items are key parts of an internal
investigation, they are not the only tools a fraud investigator may
use.
Most people
don’t think about all the other records available to assist in an
investigation. There are many public and non-public records that can aid the
investigator in determining who was involved, where the money went, and what
the motive for the fraud may have been. These records are invaluable to the
investigator, and often play a key role in determining the details of a
fraud. (Read
more...)
January 2006:
Day-to-day administrative responsibilities consume the time of most law
enforcement managers, causing them to lose touch with the tactical and
strategic aspects of criminal investigations. Many do not directly respond
to crime scenes and seldom manage investigations. Further, they may find
that previous supervisory training rarely addressed such situations. This
holds especially true in the thousands of agencies that only occasionally
encounter major crimes.
To this end, a
brief re-acquaintance with basic investigative concepts will help managers
react to these incidents with increased confidence by knowing what to do
initially, as well as through familiarity with case management practices
that enhance opportunities for investigative success. To coordinate
investigations, managers can use these fundamental approaches seldom
addressed in formal training and often forgotten or overlooked in actual
operations. Measures include initial-response organizational tasks and
investigative principles that can contribute to a successful outcome. (Read
more...)
2005
Behind the shadow: the inherent unpleasantness of forensic
engagements needn't obscure the investigative process. With
adequate preparation and knowledge, auditors can approach forensic
accounting with confidence, not dread
OCTOBER 2005: A FORENSIC INVESTIGATION
IS NEVER pleasant for anyone involved--and it's not designed to be.
As opposed to ordinary reviews, forensic engagements are a thorough
examination of pertinent documents initiated to prove or disprove
that a crime has been--or is being--committed by a colleague or
co-worker. It's the kind of procedure that launched the
high-profile securities fraud cases against executives at WorldCom
and Enron, among other prominent examples. The result can be
bruised egos, shattered professional relationships, and in extreme
cases, prison time for senior executives. Even if everyone at the
company is eventually cleared of fraud allegations, fingers will
have been pointed and ruptures in many interpersonal relationships
will have occurred that may never be mended. (Read
more...)
When You Suspect Fraud
JUNE 2005: The new general manager of a small manufacturing company
knew something was amiss. Each time he asked the chief financial officer for
critical cost information he got the runaround. “We don’t have a cost
accounting system that can produce that information,” the CFO would say. Or,
“I’m sure we have those data somewhere. Let me get back to you.” But he
never did. (Read
more...)
2004
Managing Search and
Seizures (Canada)
2004: Your client has contacted
you with “proof” that her business has been defrauded by one of her
employees. You have been engaged to initiate a civil action against the
employee. There is good evidence that key information related to the fraud
is located at the employee’s residence. You have spent the day preparing an
application for an Anton Piller Order, and you have a team of forensic
investigators ready to assist with the search and seizure. It is now 5 PM,
you have the signed Anton Piller Order in your hand and you must now execute
the Order. (Read
more...)
2003
NOVEMBER 2003: This guide will help
you to carry out a fact-finding inquiry on behalf of your
organisation. It provides an overview of the fact-finding process
and covers the generic matters that you need to know about during
an inquiry. It does not cover all of the specialist skills and
expertise that go into making a good inquiry.
The guide tries to
follow the basic course of an inquiry from start to finish. Twenty
steps provide an easy to follow snap-shot of important issues to
consider when doing a fact-finding inquiry, from Step 1 –
Maintaining Confidentiality to Step 20 – Writing a Report. (Read
more...)
How to conduct a
Fraud Investigation
OCTOBER 2003: On a
daily basis, our society is bombarded with newspaper and television
stories headlining alleged or suspected fraudulent corporate
activity. More and more, the responsibility for dealing with these
allegations of fraud is falling upon the shoulders of HR managers,
adding to the already increasing scope, complexity, and challenge
of the HR role. How should a HR manager identify fraud, and what
are the skills needed to answer this question and investigate the
allegation of fraud? What options are available to HR managers when
confronted with suspected internal fraud? (Read
more...)
Sherlock Holmes, CPA, Part 1
AUGUST 2003: If Sherlock Holmes—the world’s most famous
fictional detective—were solving today’s biggest corporate crimes, he
probably would be a CPA, too. That’s because it takes both accounting
knowledge and the unique skills of a detective to resolve allegations of
fraud. This article addresses how investigating fraud differs from the field
of auditing. (Read
more...)
Investigating potential fraud - practical steps
2003: Tough as it
might be, an effective and well planned fraud investigation which is driven
through with the full support of senior management will result in a cleaner
and more effective company which has learnt from its mistakes. (Read
more...)
2002
Ripping apart the evidence: corporate travelers pump up gas receipts, and a
routine compliance audit yields unexpected results
DECEMBER 2002:
DURING A REVIEW OF VEHICLE expense reports, the auditor noticed several
suspicious-looking gasoline receipts submitted by one particular employee.
Some of the receipts were carbon copies rather than originals, and many did
not include a purchase date, as the top portion of these receipts had been
torn off. Furthermore, an analysis of this individual's gas use showed that
his vehicle's fuel efficiency was 10 miles per gallon less than any other
vehicle in the fleet.
Despite these
findings, the auditor had no evidence of actual fraud other than the
questionable support documents. She brought the documents to the attention
of her manager, seeking assistance with her investigation. (Read
more...)
Claims involving fraud: contracting officer limitations during
procurement fraud investigations.
SEPTEMBER 2002: A natural tension exists between the procurement fraud
and contracting communities. Fraud investigators and
litigation attorneys want sufficient time to investigate allegations of
fraud and are concerned that contracting officers will
neglect to bring suspected fraud to their attention. (Read
more...)
A rational reaction plan
WHEN YOUR FIRM IS
HIT BY FRAUD, DON'T MAKE ANY RASH DECISIONS. YOU MAY BE ANGRY, BUT
TAKE A MOMENT AND FOLLOW A FEW SMALL STEPS
SEPTEMBER 2002: It's a nightmare no
executive ever hopes to experience: it appears a serious fraud has
been committed against your organization, and as a senior member of
the corporation, you have an especially important role in shaping
the steps required to address the problem. The first issue you may
have to contend with is your reaction. Typical responses include
denial and anger. While understandable, emotions can trigger
heat-of-the-moment decisions that rarely benefit a comprehensive
reaction to the suspected wrongdoing. In fact, they often do the
opposite. (Read
more...)
Avoiding Tainted Testimony
MAY 2002: Business and government
professionals frequently do not comprehend how their words and
actions affect their ability to deliver credible witness testimony.
Failings, real and perceived, can become exaggerated when they come
to light during examinations from the witness stand. Law
enforcement officers and expert witnesses have additional burdens
if they have legal or administrative actions impacting their
credibility. Regardless of the witness' qualifications, tainted
testimony carries little, if any, weight in judicial proceedings.
The goals and objectives in preparing for
testimony include, but are not limited to, sufficient documentation to
recall and reconstruct investigative steps, documentation of interviews,
avoiding analyses that exceed levels of expertise and preserving the
integrity of evidence and work products. (Read
more...)
2001
Signs of fraud: Discovery
SEPTEMBER 2001: What is the first
thing you should do when a fraud is discovered? The most important
thing may be what you don't do first. Do not shout out that a fraud
may have been committed. Keep the discovery or suspicion as quiet
as possible. While the identity of a perpetrator and the full
extent of a fraud remain unknown, it is best to keep an
investigation small and quiet. The more people that know an
investigation is under way, the more likely that the perpetrators
will find out and cover their tracks. (Read
more...)
2000
Conduct an
Internal Fraud Investigation - part 1
FEBRUARY 2000: Internal fraud investigations arise when fraud is
suspected within an organization. Investigators conduct procedures that far
exceed the scope of a customary audit. In fact, they are responsible for
developing evidence to support a case that has the potential to be
successfully prosecuted. (Read
more...)
Conduct an Internal Fraud Investigation - part 2
FEBRUARY 2000: When employees commit fraud it is usually in the
form of asset misappropriation, which also is known as employee theft or
defalcation. Asset misappropriation can lead to a material misstatement in
the financial statements when left unchecked. Asset misappropriation
includes both the theft of a company's assets (e.g., cash or inventory) and
the misuse of a company's assets (e.g., using a company car for a personal
trip). Part two of this series identifies the various asset misappropriation
schemes that may be part of a fraud investigation. (Read
more...)
Conduct an Internal Fraud Investigation - part 3
FEBRUARY 2000: In this section of our four-part series, we
will cover methods of making illegal payments (Read
more...)
Conduct an Internal Fraud Investigation - part 4
FEBRUARY 2000: Now it is time to conduct the investigation. A
fraud investigation involves procedures above and beyond those normally
conducted during an audit. Various means exist for investigating an
allegation of fraud, which primarily consists of obtaining information to
prove or disprove an allegation. Fraud investigators must be cautious not to
impose on the rights of individuals who are suspected of fraud. Legal issues
concerning the right to information versus privacy are described. As with an
audit, the investigator should choose the procedures that provide maximum
evidence for the minimum cost and risk. (Read
more...)
|
